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Financial Services Law Insights and Observations

Second Circuit Affirms Dismissal of Sherman Act Claims Against Title Insurers Based on Filed Rate Doctrine

State Issues

On February 11, the U.S. Court of Appeals for the Second Circuit affirmed a district court’s dismissal of a case alleging a price-fixing conspiracy in violation of the Sherman Act and deceptive practices in violation of New York state law in connection with title insurance. Dolan v. Fidelity National Title Ins. Co., No. 09-2697, 2010 WL 457318 (2nd Cir. Feb. 11, 2010). In Dolan, the plaintiffs alleged that several title insurance companies conspired (i) to fix title insurance rates, (ii) to include agency commission costs in the rates, (iii) to embed kickbacks in the rates, and (iv) to obscure these supposed costs from regulatory scrutiny by funneling the costs to and through title agents. The district court dismissed the claims based on the “filed rate doctrine,” which holds that any filed rate – i.e., a rate approved by the governing regulatory agency – is “per se reasonable and unassailable in judicial proceedings brought by ratepayers.” In this case, the title insurance rates at issue had been filed with and approved by the New York Insurance Department. The court of appeals, in affirming the dismissal, rejected the plaintiffs’ arguments that the filed rate doctrine did not apply, reasoning that (i) the rates were properly filed, (ii) the doctrine applies “to all filed rates, not merely those rates investigated before their approval,” (iii) New York insurance law did not provide a private right of action for the plaintiffs, (iv) the filed rate doctrine applied to New York’s title insurance system, and (v) the plaintiffs were merely seeking lower title insurance rates, and antitrust law cannot enjoin operation under established rates. The court further noted that decisions invoking the Real Estate Settlement Procedures Act (RESPA) and declining to apply the filed rate doctrine were inapplicable because RESPA provides for rights of action and remedies not invoked by the plaintiffs.